It sometimes sounds like potholes are the only growth sector in the U.S. economy. The American Society of Civil Engineers—representing the men and women who plan, design, and build highways, bridges, tunnels, and other projects—gives U.S. infrastructure a D+. The engineers say we should add $300 billion a year to current state, local, and federal spending, just to get to “mediocre.”

Infrastructure has helped Sen. Bernie Sanders (D., Vt.) nail down his proud status as the biggest spender among the would-be presidents this year. As ranking minority member of the Senate Budget Committee, he has published his own infrastructure program, a five-year plan called Rebuild America. He falls short of the civil engineers’ goal, but he does propose funding projects worth $1 trillion of investment over five years.

The civil engineers’ economic consultant says that deficient highways, bridges, rail, and transit facilities are going to impose capital and operating costs of more than $200 billion a year on the U.S. economy by 2020. So Sanders concludes that Rebuild America can pay for itself.

No matter: It’s all about the jobs, anyway. “The Rebuild America Act would put more than 13 million Americans to work in decent-paying jobs,” says a Sanders campaign document. “These are jobs in sectors of the economy that haven’t fully recovered from the recession, like construction, and they are jobs that cannot be shipped offshore or outsourced overseas.

“Moreover, each and every project will require equipment, supplies, and services—from architects, engineers, and building materials and supply companies. Thirteen million Americans will spend their hard-earned salaries in their communities, supporting restaurants and local stores.”

As John Maynard Keynes advised, economic stimulation has nothing to do with investment, profitable or otherwise. He thought that if unemployment were bad enough, the government’s stimulus policy could be to bury money and put people to work digging it out. Thus he praised the building of pyramids in ancient Egypt and the building of cathedrals in medieval Europe.

The civil engineers aren’t wrong; there is a crying need for infrastructure investment. But these projects should not be managed by the same reckless officials who have allowed the infrastructure to deteriorate. For decades, they have been too responsive to business interests seeking subsidies for new roads to serve their new developments, which often are unnecessary and usually short-change needed maintenance.

To build a new highway or to replace a dangerous bridge, private investors should be free to raise their own money with the intent of making profits by collecting tolls, fares, and user fees of all kinds.

And these developers should be protected from rapacious regulators and confiscators like those who fixed fares below cost and then took over bankrupt transit lines and bus companies.

The higher prices that rational investors will charge us to ride on their trains and cross their bridges will be a useful suppressant of subsidized demand. The result will be better infrastructure and probably less of it.

How many cars and trucks will an interstate highway have to carry if a toll, using pricing that varies with demand, is as high as the traffic will bear and also is applied to the alternative roads? How much more attractive would investors find private rail freight if some truck trips were priced out of the market?

Some of our crumbling infrastructure never would have been built if it had to pass the cost-benefit analysis imposed by markets. Other projects that loom, like high-speed rail from nowhere to nowhere, would not be built. And the important structures inherited from our more sensible forebears might not be crumbling.

As a first step, a few congressmen have proposed devolving highway funds back to the states. They want to cut the federal motor-fuels tax to the bare minimum, and let state and local officials balance what they need against what they are willing to pay for with their own fuel taxes. More power and less money to them.

I envision reasons to be ‘extremely’ cautious within the short-term (approximately, 5 to 15 days). Gold is now close to its’ resistance, which will make further ‘upside’ progress very difficult to achieve, at this point. It is now registering its’ sixth week in ‘overbought territory’. Finally, coming from an ‘overbought’ area, any 'rolling over' to the downside may prove to be significant.Sometimes, the markets give mixed signals and it becomes very difficult to understand the message as seen on the charts. These are the times during which my readers should be alerted so as they are able to take the correct measures.Yesterday, on Tuesday, Mach 29th, 2016, Chairwoman Dr. Yellens’ decision surprised the world by returning to her “dovish” views. She rallied global stock markets, again, by performing exactly what she is being paid to do. She stated that the FED will proceed “cautiously” regarding raising future interest rates. As I have repeatedly said, since last year, the FED will not raise short- term interest rates. Now, Dr. Yellen rejoins the rest of her ‘cronies’, at the global Central Banks. But yesterday’s stock market pop will just be a ‘blip’ on the chart, and all will be quickly forgotten when stocks are trading 12-30% lower this year.However, my aim is to maximize every dollar in which we invest. Hence, this is why both the long-term and the short-term indicators have to be in sync, in order to provide us with the maximum benefit of profits. This is the juncture where bearishness comes in. When analyzing the short-term time frames, which affect the next 10% move, I am forced to turn ‘bearish’. This is displayed in the chart below, on the gold miners index.

Gold Miners Bullish Percent IndexThe short-term signals are indicating that it will have a large move downwards, which will shake out the weak positions before ‘starting the next multi-year bull market.The short-term weekly chart (below) of the ‘bullish percent indicator’ on the gold miners, is revealing that a “correction” is occurring. Gold and gold miners are at a reversal level. When there are any readings going above the 70% level, and then declining under the 70 line, it is indicative of a ‘topping pattern’, which is an indication of a drop, yet to come.This analysis falls in line with a recent traders gold forecast published this week.

My readers know that we are firm believers in gold and believe that it is the ‘asset class’ for you to own, for the future, expressly during the next ‘financial crisis’. This is my bullish view, which is long-term, in nature. For long-term trends, it is always best to view the long-term time frames.

If we look at the monthly GLD chart, which has already broken out of its’ downtrend from 2012. This is a bullish signal and a trend change on the monthly chart which will generally continue for a few years.

Significant Low Still Ahead‘Commercial traders’ actions can be very useful in the identification of trend trading opportunities. This is the only position that I track in these reports. The ‘commercial traders’ control more than 50% of the total open interest. The COT reports provide a breakdown of each Tuesdays’ open interest for markets, in which 20 or more traders hold positions, equal to or above the required reporting levels that are established by the CFTC. The weekly reports for Futures-and-Options-Combined Commitments of Traders are released every Friday at 3:30 p.m. (ET). ‘Commercial traders’ have not been this bearish on silver, since 2008. Which, at that time, silver traded from $21.00 per ounce, all the way down to the $8.00 area. Currently, the commercial traders are bearish indicating that lower prices are likely in the near future.

The Commitment of Traders Report (COT) forecasting that metals are topped!

The U.S. Dollar will most likely trade with a bullish bias.

However, an experienced chartist does not arrive at decisions merely by using only one factor. It is only when the various signals line up that the decision is cemented in concrete.Whenever, the speculation on an ‘asset class’ over-extends, it is time for a pullback. This indicates that speculation has reached levels where tops are generally formed. Such tops lead to a drop of approximately 10 percent.If the traders buy in now, they will most likely see a 10% loss. Many may even liquidate during the time that they should instead be buying. Hence, this article is written to warn my readers. If we do not buy now, we will earn 10 percent more, during the next rise.Only a few experts, who have spent enough time reading and analyzing charts will be able to recognize these fine nuances.My subscribers should either ‘short’ or stay away and avoid buying now. I will make a posting again when the best time is for when both short-term and long-term indicators are lined up perfectly.Over the next 24-36 months the financial system, stock markets, commodities and currencies are going to change dramatically. Trillions will be lost by investors are they sit and watch these events unfold and do nothing to prepare or protect themselves.There are many things which can be done to avoid much of this nightmare and also several ways to earn life changed amounts of money if one knows what to do. I did this myself back in 2008-2012 and the same thing is happening again.

HONG KONG – In March, meetings of the G-20, the Chinese National People’s Congress, and multiple think tanks all reflected a growing awareness of the risks to the global economy posed by deflation and intensifying financial instability. In mitigating these risks, the path that China takes will be particularly important. But avoiding a hard landing in China is a necessary but insufficient condition for global recovery.

Contrary to the advice of many Chinese economists, the country’s policymakers have opted not to follow the conventional Western approach of using flexible exchange rates as the main shock absorber for volatile capital flows and thereby freeing monetary policy to provide liquidity for domestic structural adjustments. This satisfied both Western economists and global financial markets, which breathed a collective sigh of relief when Chinese leaders reaffirmed their commitment to maintaining a stable renminbi.

The fear was that, if China sought a weaker exchange rate to escape deflation, the result would be another round of global competitive devaluations and even more deflation. Fortunately, China’s leaders recognize that, if the world remains mired in a balance-sheet recession, the lack of aggregate demand, by continuing to weaken trade, will drag down their own country’s growth.

But, of course, China still needs to find a way to cope with capital outflows, while pursuing the structural reforms that are needed to place its economy on a sustainable long-term growth path. As we recently argued, the key will be to maintain an annual growth rate of roughly 6.5%, while pursuing a multifaceted short-term stabilization plan that aims to stimulate job creation to offset the losses from restructuring inefficient industries and eliminating excess capacity.

Meanwhile, the People’s Bank of China (PBOC) would face the unenviable task of both maintaining exchange-rate stability and combating deflation, by ensuring that the liquidity needed to support the shift away from manufacturing toward services and consumption is available at reasonable rates.

Given how much of its official reserves China has already spent stimulating the economy and stabilizing the exchange rate, as well as the size of capital outflows – equivalent to three times the current-account surplus last year – tactics like reducing reserve requirements would be key here.

The PBOC would, of course, have to tighten controls on foreign exchange. But it is also contemplating other macro-prudential instruments, such as a kind of Tobin tax, the levy on financial transactions first suggested in 1972 by the Nobel laureate economist James Tobin, in order to discourage volatile capital flows.

All of this amounts to Plan A – an unavoidable strategy for stopping deflation in China. But, in today’s multipolar global system, no single country can save the global economy from debt deflation.

That is why the world must also consider implementing a shared strategy; call it Plan B.

Of course, collective action will not be easy – not least because some measures, such as a global monetary or fiscal policy, were ruled out at the 1944 Bretton Woods conference, where world leaders created the international economic and financial architecture that prevails today. But, in the face of unprecedented threats to global economic stability, it may be time to convene another Bretton Woods-type conference to determine what collective measures are possible.

There is plenty of incentive for action. With the advanced economies facing rapid population aging, large public-debt burdens, overstretched monetary policies, and fractious politics, the global economy’s capacity to escape its current rut depends largely on the emerging economies.

After all, while these economies are facing challenges of their own, they enjoy more favorable demographics and are experiencing rapid urbanization. As a result, they have huge potential for productivity gains, which would strengthen global economic growth, and massive demand for sustainable infrastructure to reduce resource depletion and address global warming.

The main constraint on realizing the emerging economies’ potential is financial, with the Bretton Woods institutions unable to provide the needed capital. If the world is to escape the debt-deflation trap – not to mention address rising income and wealth inequality – this must change.

The recent panic over the renminbi’s depreciation highlights another compelling reason for collective action. In today’s world, nobody is safe from large and volatile capital flows – not even countries that have built up huge amounts of self-insurance in the form of foreign-exchange reserves. In 2007-2009, the advanced economies managed to escape a liquidity crisis, largely because the US Federal Reserve was willing to engage in liquidity swaps with key central banks, mostly those of US allies. Only with a global liquidity-insurance system – underpinned by multilateral currency-swap arrangements – can countries pursue much-needed reflation, without excessive fear of capital flight and/or exchange-rate devaluation.

Finally, collective action is needed to make unconventional monetary policy more effective.

Thus far, such policies have failed to revive the global economy largely because commercial banks and other lenders retained the liquidity they received from their central banks, instead of channeling it to the real economy by providing credit to small and medium-size enterprises and investing in long-term infrastructure projects.

It is no coincidence that from 2010 to 2014, the largest banks, firms, and investment funds increased their cash holdings by $3 trillion – roughly the amount by which central banks in reserve-currency countries expanded their balance sheets over the same period. By enabling countries to eliminate excess capacity, reduce leverage, and balance tax policies – all while reducing geopolitical uncertainty – collective action to escape deflation and boost growth would mitigate financial institutions’ risk aversion, thereby improving the transmission mechanisms of unconventional monetary policies.

Reaching global consensus is always difficult. But, in today’s context, there is no avoiding it. If countries continue to try to go it alone, the entire world will suffer.

Where did the weapons used in the 2015 terror attacks in Paris come from? Files from the ongoing investigation now make it possible to follow the trail. Years of EU shortcomings helped the firearms on their way.When Yohan Cohen died, he was lying on the floor of the Jewish supermarket where he worked. Next to him lay three dead bodies. Cohen had been shot in the face and chest by the man wielding two assault rifles. Cohen whimpered and screamed in pain. The gunman asked his other hostages what he should do with him: Should he shoot him so that he finally falls silent? "Don't kill him," the others begged. But at some point, the screaming and whimpering ceased on its own. Cohen, a 20-year-old student, was dead."We are such stuff as dreams are made on:" Cohen had posted the line from Shakespeare on his Facebook page as a promise of all he had hoped to achieve in life. But now, there were no more dreams left to dream -- everything had ended just as the Shakespeare sentence ended: "and our little life is rounded with a sleep."Cohen died in Paris, in the Hyper Cacher supermarket where, on that Friday in January, 2015, Jews were buying kosher groceries for the Sabbath. The murderer, Amedy Coulibaly, a criminal since his youth who had been radicalized in prison, was carrying two Ceska Sa vz.58 automatic rifles. One of them was the short version, which had once been modified so that it could only fire blanks -- transformed into a harmless noise-maker. But it had since been converted back into a lethal weapon. It was this Ceska that Coulibaly used to shoot Yohan Cohen -- deadly shots from a weapon that should not have been available on the open market any longer.Jan. 9, 2015 was the last day of Cohen's brief life. But it was also the last day of a long lead-up to the crime that took his life. It was a crime that began fully six years and 233 days before Coulibaly walked into the Hyper Cacher store in Paris.The first day was May 21, 2008, the day the European Union announced it was planning to push through stricter rules pertaining to assault rifles. The regulations would allow weapons aficionados to decorate their living rooms with assault rifles if they so desired, but only if they had been deactivated such that they could never again be used to fire live ammunition. The EU said that the new guidelines would contain extremely strict technical standards for such deco-weapons.But then nothing happened -- for six years and 233 days. Worse yet, blank-firing guns and other so-called alarm weapons weren't included in the proposed regulations. If one irreversibly modified an assault weapon into a rifle that could only fire blanks, the EU bureaucrats weren't interested. Brussels was only interested in weapons that could no longer be fired at all, not even blanks.As early as 2013, though, Slovakian police had warned Europe how easy it was to reactivate such modified weapons so that they could once again exert deadly force. The EU knew about it, talked about it and recognized the danger. But did nothing. Until Jan. 9, 2015 when Coulibaly shot and killed four people with such a weapon. Officials in Brussels have since come to the realization about just how easy it is in Europe to obtain an automatic weapon capable of firing live ammunition -- and how difficult it is for the authorities to take action against the flourishing black market.

An Uncontrolled Illegal Weapons Market

In total, Islamists wielding firearms killed 150 people and wounded 400 in Western Europe in 2015. That includes the January attacks in Paris on the editorial offices of the satirical magazine Charlie Hebdo and on the Jewish supermarket. It includes the November massacre in the Bataclan and the Kalashnikov attacks on Paris street cafés. It includes the February attack on a synagogue and café in Copenhagen. And the failed, would-be mass murder on the high-speed Thalys train from Amsterdam to Paris. As the attacks in Brussels on Tuesday have once again made clear, Europe and the Europeans have lost their sense of security: The hope that they could keep terror at bay has been exposed as an illusion. The symbol for this lack of security is the illegal weapons market -- a market that the authorities do not have under control.Today, investigators know that they are dealing with an entire arsenal of deadly weapons. It's not just reactivated blank-shooting weapons like Coulibaly's Ceskas or his Tokarev pistol, a weapon which went through the same transformation -- from deadly weapon to blank-firing pistol and back. When European terrorists are looking to acquire a tool of murder, they have a wide range of choices available to them. There are the old reliables like the Russian-made Arsenal revolver model 1895, made in 1932 -- one of which was found in Coulibaly's apartment. Or the Belgian FN Browning of the type obtained by Abdelhamid Abaaoud, a participant in the Paris attacks. But weapons stolen from militaries or police forces are also available, as in the case of the Copenhagen attacks, which resulted in two deaths. And then there are all of the Kalashnikovs from the Balkans that find their way on a variety of paths to Western Europe. Following the Charlie Hebdo attacks, police confiscated two such weapons used in the killings; after the Paris massacres last November, they impounded six of them.An international team of journalists belonging to the newly established European Investigative Collaboration, of which SPIEGEL is a member, spent the last three months searching for clues. The reporting has revealed the first precise look at the weapons used in the January and November attacks in Paris and has led to weapons traders and to an alleged French police informant who apparently supplied part of Coulibaly's arsenal. The reporting also shows how easy it would be for terrorists to obtain weapons in Germany as well -- and how one of Germany's most dangerous right-wing extremists did exactly that.Our reporting shows that obtaining a weapon in Europe is hardly an insurmountable hurdle to the carrying out of an attack. Indeed, the EU has essentially fostered an easily accessible weapons bazaar for terrorists. The research reveals years of European Union failures.

Death on Command

Sometimes, all it takes is two words to uncover the vast ineptitude of officialdom. Or, more precisely, the lack of two words. On Nov. 18, 2015, the European Commission announced a proposal to strengthen firearms control in the EU. The announcement concerned the Firearms Directive, which determines who in Europe is allowed to buy and sell firearms, what is permissible and what is not. The announcement came far too late for Yohan Cohen, the Jewish student, who had by then been lying in a Jerusalem cemetery for 10 months. But the EU finally sought to send a strong signal. Weapons laws in EU member states were to become stricter in the awake of the terror attacks and controls were to be strengthened.European Commission President Jean-Claude Juncker accompanied the announcement with a few words that likely said more than was intended. "Organized criminals accessing and trading military grade firearms in Europe cannot and will not be tolerated any longer," the statement reads in the French original. "Any longer?" Is that perhaps an open admission that the EU tolerated such a thing for far too long? Is it the admission of European failure? In the official English and German translations, the two words "any longer" are missing.Back in 1991, the EU tried to regulate the proliferating weapons market for the first time. The result was the Firearms Directive, which had primarily a single goal: That of guaranteeing free trade to the degree possible -- even for firearms -- within the European market. The directive expressly excluded alarm weapons. They weren't considered to be firearms.It took 17 years before the EU realized that the greatest danger presented by weapons was not that over-regulation could infringe on free trade, but that criminals could use them to kill and injure people. The result was a modification to the directive in May 2008, one which seemed to contain the solution to the shortcoming of the original directive: "The Commission shall ... issue common guidelines on deactivation standards and techniques to ensure that deactivated firearms are rendered irreversibly inoperable."It sounds good, but the directive lacks two elements -- omissions that would later cost Yohan Cohen and three others their lives in the Hyper Cacher supermarket. First, a date by which all EU member states were to have fulfilled the EU standards. And second, alarm weapons were left out: distress flares, starter pistols and blank-firing guns, all weapons where everything in the rear part of the weapon is still fully functional, including the magazine and the breechblock. Otherwise, it wouldn't be able to fire blanks.

A Warning from Slovakia

Such weapons are used in films, for firing salutes and by all kinds of crazies and showoffs who want to let out their inner Rambo. For the EU, these kinds of shooters were a blind spot. They were not considered firearms because they did not expel bullets from their barrels, but they also didn't fall under the category of deactivated weapons because they still went "boom." The new 2008 directive contained a fundamental absurdity. It announced strict regulations for weapons that, due to having been deactivated, could no longer shoot -- the decorative weapons. But the EU paid no attention to how live weapons could be transformed into alarm weapons: guns that could still shoot, even if only blanks. Yet it was exactly this category of weapon that was much more interesting for terrorists and other criminals, as the 2015 attacks show. It wasn't a former decorative weapon that was used. On the contrary, Coulibaly had an entire arsenal of once active weapons that had been modified to fire blanks. They were much easier to re-modify such that they could again fire live ammunition.In September 2013, EU member state Slovakia sent out an alert -- in English so that it could be understood everywhere. Slovakia had particularly weak regulations when it came to the modification of deadly weapons into alarm weapons. Two metal pegs in the barrel were considered sufficient. The Slovakian authorities were concerned and they published a poster with 16 images.The poster noted that alarm weapons from Slovakia were being "reactivated increasingly often." All it took, the poster noted, was "simple modifications:" simply removing the two pegs from the gun barrel. It was also extremely easy to purchase such weapons at stores. Buyers only had to be 18 years old and present a valid ID. The poster showed a pistol that that had been transformed into a blank-firing weapon by a company called Kol Arms and a Ceska vz.58 automatic rifle that had undergone the same procedure. Both weapons were later reactivated.The message was heard in Brussels. In October 2013, just a month after the Slovakian warning, a European Commission report noted that law enforcement authorities in the EU were concerned that "alarm guns, air weapons and blank-firers are being converted into illegal lethal firearms." The Commission, the report stated, was aware of "significant differences in deactivation standards between Member States" and that homicides had been committed using such weapons. The report concluded that it was necessary to "evaluate the necessity of legally binding common standards for the whole EU."The report came fully five years after the 2008 Firearms Directive, yet virtually nothing had been done. Now, an evaluation was to take place. When that evaluation was finally completed at the end of 2014, Brussels had succumbed to an oversight: According to EU definitions, deactivation standards only apply to firearms that are made totally unusable. Alarm weapons were again left out. The Slovak alert had fallen through the bureaucratic cracks.It is unclear how that happened, but there are indications that it may have been intentional. In May 2014, there was a meeting in Brussels of EU experts on the weapons black market. When asked about what the consequences were for countries that did not fully implement the 2008 directive, an official with the Directorate-General Enterprise and Industry replied that there had only been a couple of inquiries and that no further steps had been taken. The official noted that the directive was consistent with the "minimum harmonization principle" -- which means there was plenty of leeway.When it comes to other issues, that may be a good thing and work well. The principle that the EU only regulates what is really necessary keeps the union together and people happy. But when it comes to EU security, the principle costs human lives. The freedom of movement for persons and goods becomes laxity, laxity becomes carelessness and carelessness becomes deadly risk.Seven months after the meeting in Brussels, Amedy Coulibaly stormed Hyper Cacher. For years, he had been in close contact with Chérif Kouachi, who, together with his brother Saïd, had created a bloodbath at the editorial offices of Charlie Hebdo two days before. By the time Coulibaly took his hostages in the supermarket, the Kouachis had barricaded themselves inside a printing shop outside of Paris.

Terrible Condition

Inside Hyper Cacher, Coulibaly shot a man in the back as he was trying to run out of the store. He then shot a second person to death and shot Cohen. Coulibaly murdered a fourth person, a student, when he grabbed for one of his weapons. By the time Coulibaly died in a hail of police bullets, he had held 23 people hostage for more than four hours. He was armed with two Ceska vz.58 assault rifles, one of them manufactured in 1961, the other in 1964 -- really nothing but decommissioned military scrap. The French investigation files note that they were in terrible condition. But they killed nonetheless.The Slovakian police poster had warned of exactly this type of weapon, the Ceska vz.58. The ones used by Coulibaly bore the seal of the company Kol Arms, which had modified the first to shoot blanks in 2013 and the second one year later. The second carried the serial number 63622, and fired the bullet which killed Yohan Cohen. Both guns were sold in 2014, before being reactivated."This kind of reverse modification is much easier than for weapons that have been completely deactivated because it only involves the barrel," a ballistics expert with the Paris police wrote. One can obtain such weapons "via the Internet and in the mail." The extra short model, called a Subcompact, costs slightly more than €500. The longer version, known as Compact, costs between €230 and €280.Coulibaly was also carrying two Russian-made Tokarev TT33s, which cost around €300 each. These weapons, too, were old, manufactured in 1951 and 1952 -- and modified into blank-shooters by Kol Arms in 2014. They too were reactivated by simply removing the two metal pegs from the barrel. Two such Tokarevs were discovered near Marseille in October 2012, followed by more and more such finds. Paris recorded the first reactivated Tokarev in July 2014, according to French investigators. Coulibaly had four of them stashed in his hideout in southern Paris. But how did he get his hands on this arsenal? The last link in the chain is still missing, but the trail leads to a shop in Slovakia, and into the depths of French police work. According to the French investigation, the weapons that ended up in Coulibaly's possession were ordered from this shop -- by a police informant.The informant claims that he made the purchases at the behest of the police as part of an investigation into a network of weapons suppliers. If that is true, if it was a secret service operation carried out by the state, then it spun out of control -- a mistake that four people, including Yohan Cohen, paid for with their lives.

Container after Container

The shop where Coulibaly's weapons were purchased is called AFG Security and it is located in the town of Partizánske, a two-and-a-half hour drive from Vienna. The store is in the basement of a two-story apartment building on a dead-end road near the train tracks. Stairs lead down below street level and inside, a camouflage net hangs from the ceiling. A bottle of Cabernet, emblazoned with a picture of Adolf Hitler and the words "Mein Kampf," stands in a display case.This shop, located in the middle of nowhere, is the source of thousands of deactivated weapons that have been sold across Europe. Firearms from here have ended up in the hands of Islamist terrorists in France, gangsters in Great Britain and a man who was once one of Germany's most dangerous neo-Nazis. Over the course of years. The AFG website continues to claim that the weapons are just "for fun" -- for the reenactment of World War II battles, for example. But the key part comes later: "Most of the expansion weapons (Eds. Note: alarm weapons) are originals (originally 'sharp') with minor modifications which disable the shooting with original - 'sharp' ammunition." The word "sharp," in the clumsily written English version of the website, refers to the ability to fire live ammunition.The guns are mostly decommissioned weapons from the Slovak military. Container after container of these firearms wound up in the hands of companies like Kol Arms, which then converted them from lethal weapons into alarm rifles. By the time the weapons left AFG Security, they were considered harmless -- at least according to the law. For the lawless, however, they were the hottest new thing on the market. AFG sold an estimated 14,000 alarm weapons abroad, mostly over the Internet, according to the German Federal Criminal Police Office (BKA). The agency currently has 33 open investigations into customers in Germany. Many of the shop's customers apparently appreciated how quickly the weapons could be re-converted into active firearms. French investigators recently tried it out for themselves: It took only two hours for a locksmith of modest talent to reopen the barrel. Doing the same with German-made alarm guns isn't nearly as easy. Investigators from several EU countries have been monitoring the shop since 2014 after being tipped off by packages from Germany mailed to Alexander M., alias "Smokey," a serial burglar from London who has since been sentenced to life in prison. The packages included four fully functioning vz.61 Scorpion submachine guns, which are as small and deadly as the name implies. Smokey ordered the guns from jail using his smartphone.Initially, the authorities had no idea who the supplier was. They knew only that the person had been active on the anonymous trading platform Agora on the so-called Darknet. British and German police dispatched cyber investigators to order weapons in a sting operation. The tracking number of the packages led them to a mechatronics student named Christoph K. in the Bavarian city of Schweinfurt. Christoph K. is a slender young man in his mid-twenties with technical ability, good business acumen and few scruples. One morning in January 2015, police raided the campus of the University of Applied Sciences in Schweinfurt where Christoph K. was pursuing his studies. Further arrests and legal proceedings followed all across Europe.

'Unaware of the Consequences'

Christoph K. had been reactivating the AFG alarm weapons in his basement workshop and then reselling them for 10 times the price. Four weeks ago, the Schweinfurt regional court sentenced him to four years and three months in prison. Defense attorney Jochen Kaller said his client had been "unaware of the consequences" of his actions.Christoph K. wasn't AFG's only regular German customer. The company's weapons registry, which the BKA has obtained, also includes the name Alexander R., 39, who bought two Kalashnikovs and three dozen Scorpions. In Ferlach, a hub of the Austrian weapons industry, he obtained raw tubes for the new barrels needed to reactivate the weapons.Officials at the Office for the Protection of the Constitution, the German domestic intelligence agency responsible for monitoring extremism, had already had Alexander R. on their radar. Back at the end of the 1990s, he had been part of weapons deals with a former leader of Hoffmann, a right-wing extremist paramilitary sports group. At the time of their arrest, police seized close to a dozen submachine guns along with five hand grenades. After his conviction, R. spent more than four years in prison. While in jail, he wrote to his comrades that he planned to destroy "the regime of the Federal Republic of Germany." Police found a pamphlet in Alexander R.'s possession stating that the undercover agents who caught him should be shot and their corpses left with a warning note in their mouths. "Perhaps together with his dick and balls."After his release from prison, Alexander R. initially kept a low profile. But beginning in mid-2013, he began purchasing large quantities of weapons from AFG in Slovakia. Operating under the assumption that the company was under BKA surveillance, R. drove several times directly to Partizànske, where he paid in cash rather than ordering over the Internet. On the telephone, he once spoke of a "Big Chainsaw," a friend of "Beans," terms a regional court in Rhineland-Palatinate is convinced refers to weapons and ammunition. A few months ago, the court sentenced Alexander R. to six years in prison. His application for appeal was rejected on all major points. Meanwhile, the convict hasn't revealed the location of the three dozen submachine guns.Claude Hermant, 52, who had previously worked for the right-wing populist Front National party's security service in France, also placed a major order with AFG in 2014. The stalwart right-winger has paramilitary training and is also known to have spent a few months in jail in Africa, where rumors circulated about his alleged links to a failed coup attempt.

Found at the Scene

Hermant runs a survival shop near Lille, France. Through the firm, he placed an order with AFG for pistols, submachine guns as well as Ceska vz.58s that had been deactivated by Kol Arms. During a search conducted later, investigators seized an additional 15 vz.58s as well as a Tokarev TT 33 pistol along with cases of ammunition. But three of the weapons Hermant ordered from AFG -- a Ceska and two other Tokarevs -- had already been located. Police found the vz.58 machine gun at Hyper Cacher, where it had been used to kill Yohan Cohen. The two Tokarevs were also found at the scene.So was Hermant an unscrupulous merchant of death? Police also found two reactivated Beretta pistols in his possession. But Hermant told investigators a different story following the Coulibaly attack: He claimed he had purchased the weapons in 2014 with the knowledge of the French federal police, the Gendarmerie, as part of a sting against arms traffickers. He said that some of the weapons had been sent to a dodgy underworld figure based near Roubaix. Hermant claimed that he explicitly asked for permission from his police contact man. The official, Hermant says, gave him the "green light." Police officials have since been forced to admit that Hermant had been a "registered informant" since 2013 and that they were interested in obtaining information about weapons sales and had even told him that. "But I also manage 30 sources -- that's complicated," a police official said at a hearing in Lille convened after the January shootings. The official claimed that no sham weapons deal had taken place under police observation. To this day, the French government has kept its contact reports with Hermant classified. It remains unclear how Hermant's weapons ultimately wound up in Coulibaly's hands. Nor is it clear who provided the Islamist with the other Ceska vz.58. It is known that it was purchased on location from AFG by a Belgian weapons collector. But from that point the trail is lost.

The Balkans Bazar

On July 23, 2015, a white Mercedes disembarked from the ferry in Rødbyhavn, Denmark, after making the 45-minute crossing from Fehmarn, Germany. Sanel H., a Bosnian man, was at the wheel, but he didn't get far. During a routine inspection, Danish investigators uncovered a cache of weapons in the vehicle, discovering 10 hand grenades and 13 rifles, including four machine guns. Sanel H. told investigators he was acting alone and had no accomplices. Nor did he reveal what he intended to do with the weapons. Officials found a scrap of paper on him bearing the name of the Danish city Aalborg with a telephone number on it, but Sanel H. claimed it wasn't his writing and that he knew nothing about it. Danish police then questioned him about a former police officer from Bosnia. Sanel H. admitted he had known the man, and that he had been "a very honest guy" who had nothing to do with weapons trafficking.Two months later in Aachen, Germany, a police swat unit arrested the "very honest guy" at an autobahn on-ramp. The German authorities had been tipped off by colleagues in Bosnia. They seized 25 hand grenades, two explosive devices and four disassembled Zastava M70s, Serbian Kalashnikov knock-offs. A German accomplice was traveling with the ex-cop in the vehicle. At the same time, police in Bosnia-Herzegovina arrested additional members of the gang. When the Kouachi brothers holed up in a printing shop after the bloody rampage at Charlie Hebdo in January, they were armed with Zastava M70s. Investigators also found an M70 on the floor of the Bataclan concert hall after the November massacre. In addition, police found three of the weapons in the black Seat Leon car out of which some of the terrorists in the November attack fired on people at sidewalk cafes. The Zastavas used in the attack didn't come out of the Slovakian supply chain: They're weapons of the sort that terrorists in Western Europe have always clamored to get their hands on -- old automatic weapons from the Balkans that were never deactivated. There are believed to be almost as many of these faux Kalashnikovs as there are people in the region -- people with very little money and who sell the weapons in order to make some. The Zastava found at Bataclan was delivered to Sarajevo on May 26, 1981. It had been shipped to the local Yugoslavian Territorial Defense Forces, the military reserve units that would later become the core of the Bosnian forces during the civil war when Yugoslavia disintegrated. It is believed that the second of the three Kalashnikovs used in the Bataclan attack likewise originated from the Balkans -- a Chinese Norinco that used to be common in the Albanian military. It's also possible the third weapon used, a machine gun built in 1985 in Bulgaria, may also have come from the region. It is not always possible to trace the paths of weapons used in the Balkan wars.It's also possible that German weapons from the stockpiles of East Germany's National People's Army may have fallen into the wrong hands. During a meeting last September of the EU's Standing Committee on Internal Security (COSI), a French official noted that "the perpetrators at Charlie Hebdo used an automatic rifle from the former GDR." The ballistic reports, which have been obtained by SPIEGEL, provide no evidence to suggest this however. Germany's Left Party made an official request for a response to the claim by the German government, but officials stated that they would not comment "about the origins and dissemination of the weapons because there was still an open investigation." Still, it wouldn't come as a surprise if German weapons had made their way into terrorists' hands. MPi-Ks, the East German version of the Kalashnikov, have surfaced several times in Belgium. It is believed they came from the Balkans and that they had been sawed apart and then welded back together. Belgian security sources claim that decommissioned East German weapons were also sold to parties in the civil war. As for the Bulgarian Kalashnikov used in the Bataclan attacks, it's also possible that it came straight from Bulgaria. As is the case in many former Eastern Bloc countries, Bulgaria is home to massive warehouses filled with stockpiles of old guns. For one study, Bulgaria reported a surplus of more than 46,000 small arms and light weapons. For years, the standard practice for these countries had been to sell whatever could be sold and to destroy what was left over. It's a rule of thumb apparently also followed by Romania (which has a surplus of 1.25 million weapons), Albania (259,000) Serbia (90,000) and Bosnia-Herzegovina (53,000). But those are only the weapons to be found in government arsenals. It's possible that the weapons supplies of private individuals are even larger. When Albanians plundered their army's warehouses in 1997, 550,000 weapons and more than 1.5 billion rounds of ammunition went missing.The EU and the United Nations donated a few million euros to collect and destroy automatic rifles, mortars and hand grenades in the Balkans, but the sum fell far short of what would have been needed to solve the problem. Besides, the suddenly independent Balkan states had neither the money nor the strength or even the will to address the problema.Today, traveling traders buy up the Kalashnikovs and send them north along the roadways. Only a fraction of the hundreds of passenger buses that depart for Western Europe each day are checked, not to mention the vans and private automobiles. Customs officials don't have much of a chance, and some are also bribed, as a report by the French broadcaster Canal Plus recently documented.That is also how the Bosnians who were caught last year in Rødbyhavn and Aachen made it into the EU. Or the Montenegrin Vlatko V., who was stopped last November on the A8 Autobahn with eight Kalashnikovs in his VW Golf. The German government says that such discoveries of weapons from the Balkans are a regular occurrence. In 2014, 264 weapons of war were confiscated by the BKA. But Berlin stops short of calling it a "disconcerting trend."Still, the situation was such that Abdelhamid Abaaoud, the alleged planner of the November attacks in Paris, had no difficulties at all obtaining weapons. Abaaoud died five days after the attacks when police stormed his hideout, but three months prior to the attacks, in August 2015, Reda H., who had returned from Syria, provided testimony about Abaaoud to the French secret service agency DGSI. "He told me that I should find a soft target, a concert, for example, a place with lots of people," Reda H. said of Abaaoud. When it came to weapons, "he said that accessing weapons was no problem at all. I should just tell him what I needed. I think they had a supply network."

The Business of Death II

Allegedly, things have now improved in Slovakia. A new law was passed last summer forbidding Internet sales and sales to private individuals. The Slovakian Interior Ministry also says that the law includes "new technical standards" to prevent weapons from being reactivated.There has also been a change to the website of AFG. Now, a popup window informs visitors that the pages are only intended for professional weapons traders. Proceeding past the notice is confirmation that the visitor "is a holder of arm licence (sic)." What hasn't been changed is the fact that the Ceska vz.58, modified to only shoot blanks, is still available for €330. The Slovak description of the weapon praises its accuracy over 400 meters in addition to "very satisfactory results over a distance of 800 meters" when targeting groups -- an odd portrayal for a weapon modified to fire blanks.The sentence noting that most of the alarm weapons are originals that have undergone only minor modification so that they cannot fire live ammunition can also still be found on the website. But a salesman at the shop recently sought to reassure a customer: Now, not only are the barrels blocked to live ammunition (using a more secure method than in the past), but the magazines and breechblocks are also modified. Does that go far enough? Or does it just mean that reactivating them will now take four hours instead of two? "The new changes mean that these alarm weapons can no longer automatically reload," says Hamburg-based weapons expert Lars Winkelsdorf. "But they can still shoot. And by way of quite simple modifications, they can be turned back into live, fully automatic weapons. All you need are freely available replacement parts and a bit of work on the barrel."Making purchases over the Internet is likewise still possible for weapons dealers. Or pseudo-dealers, like one of the journalists from the EIC consortium. We wrote an email to AFG saying we wanted to buy alarm weapons of the Ceska vz.58 model. To identify ourselves as a dealer, we used papers that anyone can download from the Internet. AFG immediately registered us as a "wholesaler" and gave us rights to place orders via the Internet. We then ceased all contact with AFG so as not to fall afoul of the law.Does the practice not continue to violate the EU Firearms Directive? A European Union spokesman told us it does not. "The existing directive does not pertain to alarm weapons," he said. The only changes the EU has made are stiffer technical requirements, which will go into force in April, for completely deactivated weapons. But the new requirements don't pertain to alarm weapons because they are merely additions to the directive currently in place. A directive that does not include alarm weapons.The spokesman did note that change may be coming, in the form of the "common criteria concerning alarm weapons … to prevent their transformation into fully functioning firearms" that Commission President Juncker proposed. When might that happen? The spokesman was unfortunately unable to say.

Misguided policy has put Ankara in the unenviable position of being hated by all the actors in Syria.

By Soner Cagaptay .

The scene after a suicide bombing in Istanbul Saturday. Photo: BULENT KILIC/AFP/Getty Images

Five of the six worst terror attacks in Turkey’s history have taken place in the past three years. These attacks, which together have killed at least 250 people and wounded more than 800, are all the fallout of the war in Syria. It’s now not a question of if but when terror will strike again. Indeed, on Saturday Islamic State bombed Istanbul, killing four people and wounding another 36.Ankara’s Syria policy is so poorly conceived that Turkey is hated by all the major actors in the conflict, from the Assad regime and Russia to Islamic State (ISIS), the Kurdish Party for Democratic Unity (PYD) and the PYD’s Turkish affiliate, the Kurdistan Workers’ Party (PKK). Fighting four enemies simultaneously could bring Turkey to ruin.The Assad regime, which Ankara has tried in vain to oust since 2011, has already been connected to the Reyhanli bombing in May 2013 that killed 52 people. That attack was carried out by Turks with links to Assad’s intelligence units.Russia, meanwhile, upset with Turkey’s policy toward Assad and livid that one of its military planes was shot down by a Turkish jet fighter in November, threw its strength behind the PYD to defeat Ankara-backed, anti-Assad rebels in Syria. In return, Turkey has shelled PYD positions. Yet the PYD continues to hold large swaths of territory in northern Syria, including Rojava, which enrages Turkey’s President Recep Tayyip Erdogan.Since the collapse of peace talks with the Ankara government last summer, the PKK has launched a number of attacks inside Turkey, including the Feb. 17 bombing in Ankara that killed 30 people. The Kurdistan Freedom Falcons (TAK), an offshoot of the PKK, claimed responsibility for that bombing. The government has responded by going after PKK strongholds in cities in southeastern Turkey, shutting down entire neighborhoods for weeks in the hopes of crushing the PKK’s base. Ankara’s war with the PKK is a retaliatory battle that will only escalate. Every time the government targets the PKK, the group hits a target in western Turkey, as they did with the most recent bombing in Ankara.Yet the PKK isn’t even the biggest of Turkey’s concerns. Ankara must also contend with Islamic State. After Turkey agreed in October 2014 to cooperate with the U.S. against Islamic State, the group hit Turkey in three major attacks. Before this weekend’s bombing, there was the October 2015 attack in Ankara that killed 102. On Jan. 12 there was another attack in Istanbul that killed 13 German tourists.With five terror attacks in the past five months, the signs suggest that fighting so many enemies simultaneously has brought this terror tsunami upon Turkey: the PKK now, Islamic State next, Assad after that, and so on. Meanwhile, Russia lurks in the background supporting the PYD, perhaps even the PKK.When it comes to handling instability, Turkey survived a near civil war in the 1970s and a full-blown, Iran- and Syria-supported PKK insurgency in the 1990s. Yet this time things are different. The country isn’t ready to face a persistent wave of terror attacks. It is already deeply divided over Mr. Erdogan’s ruling Justice and Development Party (AKP) government. This polarization trumps even the terror threat, as each side blames the other after every bombing. Turkey is torn, with the pro- and anti-AKP blocks hating each other even more than they fear terror. Each new attack drives a wedge deeper into Turkish society. Islamic State could take advantage of this polarization, deepening Turkey’s schism to distract Ankara from the fighting in Syria. Russia, too, would exploit Turkey’s divisions to undermine Mr. Erdogan. Following November’s shooting down of the Russian aircraft, President Vladimir Putin criticized Mr. Erdogan personally. He thus curried favor with the anti-Erdogan Turks, at least some of whom will embrace Mr. Putin as their savior from Mr. Erdogan.Given Mr. Erdogan’s authoritarian agenda to revise his country’s constitution and become an executive president, a deeply polarized Turkey overwhelmed by terror attacks and exposed to manipulation by Mr. Putin and Islamic State will only crumble. The Turkish leader himself further fuels the divide, demonizing and violently cracking down on groups that won’t vote for him. These include leftists, secularists, social democrats, liberals, Alevis, Kurds, Jews, Armenians and moderates. It’s a strategy that allows Mr. Erdogan to build a winning right-wing coalition at the expense of national unity.What Turkey needs is a unifying politician to help the country survive the terror tsunami and avoid descending further into chaos. Mr. Erdogan could be that man, if only he could resist the temptation to crown himself executive president. Otherwise, he may go down in history as the leader who broke Turkey while trying to become a king.Mr. Cagaptay is a senior fellow at the Washington Institute for Near East Policy.

A weaker US dollar and firmer commodity prices — most importantly that of oil — have underpinned an impressive recovery in asset prices from their nadir in mid-February. Clearly we have moved on from the panic of early in the year when fear of a US recession and a large currency devaluation by China dominated investor sentiment.

As the end of the first quarter approaches, we have US equities in positive territory for 2016, oil prices above $40 a barrel, while investors are embracing credit exposure. Sure enough, funds investing in US stocks, emerging markets and high-yield bonds are attracting inflows as the investor herd chases recovery in risky areas of the market.

Soon, things are going to get very interesting, as investors face the challenge of their convictions.

If you are bearish on the global economy, think commodity prices still face a reckoning in the face of numerous supply gluts and see a huge bill due from the global credit binge — with China and the likes of Valeant in the vanguard — selling the current rebound surely makes sense.

Such a view is reinforced by examining the nature of the recent recovery in asset prices. EM, mining and energy companies, whose shares and bonds were hammered during the first six weeks of the year, not surprisingly have led the recovery. We have also seen spectacular surges in the prices for EM currencies, metals and resource companies at various times in recent weeks.This trading pattern reflects a classic short squeeze, whereby bearish bets are hastily unwound via the purchase of stocks and commodities, fuelling a further rise in asset prices.Squeezes of this sort are notoriously violent and can drive markets for some time. As JPMorgan analysts noted last week: “The short covering phase that started a month ago is very advanced but it is not yet fully completed.”

That’s not to short-change the propitious timing of those traders who waded into the market at the height of new year pessimism, and benefited from the squeeze on the bears. Some savvy fund managers in the US credit sphere started buying when risk premia for corporate debt in mid-February reflected rising odds of a recession for the world’s largest economy, a very pessimistic outlook.

Now there are signs that what began as technical bounce in market sentiment is attracting support from investors as more money follows rising prices. The betting from here in terms of sticking with risk assets largely boils down to the direction of the dollar.

EM, commodity prices and S&P 500 companies reliant on foreign revenues all like a sliding dollar. And they have a powerful ally. The US Federal Reserve, with last week’s shift to a more dovish stance on monetary policy, has indicated that dollar strength is problematic.

When the Fed is in your corner, who can blame some investors for pouring more money back into credit, equities and commodities. Why not buy when policymakers remain fully engaged in pumping up prices? And according to the folks at JPMorgan, plenty of money that was pulled out of markets last year could well return and push equities significantly higher from here.No matter that firmer US employment and rising inflation should merit a higher cost of borrowing. The Fed’s striking dovishness could well maintain the current positive momentum in emerging markets, commodities, junk bonds and equities for some time. Even the recent retreat of the dollar which has reduced financial headwinds for the US economy was downplayed by a US central bank that has hitched domestic interest rate policy to the global outlook.

The shift by US policy officials reinforces how worried we should be about China as it grapples with massive debts and slowing growth. A much weaker renminbi remains the likely escape valve for alleviating China’s economic and financial stress before year-end.So stand by for another test of the financial system and its weakest links. The great rebound has simply provided markets with some breathing room and investors only need recall how the upswing in global equities last year that peaked in November eventually turned over.

Could the government start handing out free cash?It sounds crazy. But believe it or not, it’s a real possibility. In fact, an Ivy league economist just predicted it will happen within five years…If you’ve been reading the Dispatch, you know the Federal Reserve has used crazy monetary policies to “stimulate” the economy since the 2008 financial crisis. These policies have been huge failures. After seven years, the U.S. economy is barely growing.Yet, instead of acknowledging its failure, the government is preparing to double down. And its friends in the lapdog media think it’s time for “helicopter money.”

• Yesterday, The Wall Street Journal published an article titled, “The Time and Place for ‘Helicopter Money’”...

It was the top story in The Wall Street Journal’s “Economy” section.Economist Milton Friedman coined the term “helicopter money” in 1969. He suggested the government could drop free cash from helicopters to stimulate the economy. People would collect the money and spend it. The economy would grow as a result.Friedman likely never took this cartoonish idea seriously. For a long time, hardly anyone else did either.

• But The Wall Street Journal argues helicopter money could jumpstart the economy...

Of course, the government wouldn’t actually drop bills from a helicopter. Instead, it would print money and mail checks to people...or deposit the money directly into people’s bank accounts.People would instantly become “richer.” Then they would buy more televisions, cars, and homes. This would goose the economy, according to The Wall Street Journal.

• Financial media giant Bloomberg agrees...

Yesterday, it published an article titled, “Milton Friedman’s ‘Helicopter Money’ Is Looking Less Crazy.” According to the author, “helicopter money feels very much like an idea whose time may be coming.”Central bankers and Ivy League economists like the idea. Mario Draghi, who heads the European Central Bank, recently called it a “very interesting concept.”Richard Clarida, an economist at Columbia University, thinks we could see helicopter money within five years.

• Helicopter money is rooted in bad economics...

It’s based on the idea that spending fuels the economy. Casey Research founder Doug Casey explains why this is false.It’s part of the Keynesian view, in which spending and consumption drive the economy. This isn’t just wrong, it’s the exact opposite of what’s true. It’s production and saving that drive an economy. You have to save to build capital, and capital is necessary for…everything. What these people are doing is destructive of civilization itself. And when we go into the next crisis, governments will use the disastrous results of their own policies as excuses to enact even more destructive versions of the same things.

• The U.S. government’s other “stimulus” measures have failed miserably...

After the 2008 financial crisis, it borrowed huge amounts of money. Acting through the Federal Reserve, it created 3.5 trillion dollars out of thin air. And the Fed has held its key interest rate near zero for seven years.These extreme measures were supposed to help the economy. But the U.S. economy is growing at the weakest pace since World War II. The real median household income is lower today than it was in 2007.

• The Fed’s reckless policies did accomplish one thing…

They caused stocks and bonds to soar. The S&P 500 has more than tripled over the past seven years.It hit an all-time high last May. Prices for bonds also hit record highs. Because stocks and bonds soared while the real economy barely grew, we call this the “Alice in Wonderland” economy.

The Fed has set us up for disaster. Doug Casey explains:These reckless policies have produced not just billions but trillions in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will, in many ways, dwarf the Great Depression of 1929–1946. Paper currencies will fall apart, as they have many times throughout history.

• Gold is your best defense against reckless governments...

As the ultimate form of money, gold has preserved wealth for centuries. Gold is money because it’s durable, divisible, easy to transport, has intrinsic value, and has consistent form around the world. And unlike paper currencies, the government can’t print gold and hand it out to people.Once people realize the government has set us up for a financial catastrophe, bubbles in the stock, bond, and commercial property markets will pop. Investors will flock to gold. We expect this to ignite a “gold mania” that will dwarf the recent seven-year rally in U.S. stocks.

• Gold stocks will soar...

Dispatch readers know gold stocks offer leverage to the price of gold. A 200% jump in the price of gold can cause the average gold stock to rise 400% or more. The best gold stocks can soar 1,000%...2,000%...or higher.Physical gold is your defense against destructive governments. Gold stocks are your “offense.” They’re a way to make big profits on government stupidity.However, gold stocks aren’t for everyone. They’re extremely volatile. It’s common for a gold stock to rise or fall 10% in a day. If you don’t want this kind of volatility, stick with physical gold. Doug expects the price of gold to at least triple from current levels.But if you’re interested in the huge profit potential of gold stocks, try a risk-free trial to International Speculator, our service dedicated to finding gold stocks with huge upside. For a short time, we’re offering it for $500 off the regular price. When you sign up, you’ll get instant access to our new special report, 9 Essential Gold Stocks to Buy Right Now.Now is the perfect time to take a position in gold stocks. If you’ve been following the Dispatch, you know the fund GDX, which tracks large gold miners, has already rallied 52% this year. But it’s pulled back significantly in the past few days, giving us a good entry point. Click here to take advantage of the incredible opportunity in gold stocks.

Chart of the Day

It’s never been harder to make money in government bonds...Today’s chart shows the total value of government bonds outstanding by interest rate. As you can see, nearly 90% of these bonds yield less than 2%. And 29% of them—for a total of $7 trillion—have negative interest rates.Negative rates sound bizarre to most people. With negative rates, you pay interest on bonds you own. It’s a perversion of saving and a perversion of capitalism. Negative interest rates could only exist in a world with idiot politicians in control.The European Central Bank and Bank of Japan are trying to stimulate their economies with negative rates. They think negative rates will encourage people to spend money.

So far, it’s been a huge failure. Like the U.S., Europe and Japan are growing at the slowest pace since World War II.

- The Fed has cut its rate hike forecast.- Markets are beginning to doubt them.- What will happen when they realize the Fed is stuck?

The Federal Reserve's years-long campaign to sheepishly back away from its own policy forecasts continued in earnest last week when it officially reduced the four expected 2016 quarter point hikes, suggested back in December, to just two. Given the deteriorating economic outlook, I believe there can be little doubt that the Fed will soon complete the capitulation process and remove all expectations for additional hikes this year. Even before that happens, savvy observers should have already concluded that the Federal Reserve is stuck in the monetary mud just as firmly now as it has been since the dawn of the financial crisis back in 2008.Rather than actively voicing its retreat in either its March policy statement or in Chairwoman Janet Yellen's press conference, the market-moving policy shift was buried in the minutia of the Fed's "dot plot" information array, in which each voting committee member signals their assumptions of where interest rates will be in various points in the future. Those tea leaves needed to be read to reach the conclusion that policy just got significantly more dovish. But despite the Fed's soft peddling, the policy shift made an immediate impact on markets, with the dollar getting hit by a variety of rival currencies and gold (and more significantly gold miners) climbing to multi-month highs.But perhaps the greatest casualty of the announcement was the Fed's own credibility, which is now being stretched to the limit. At Yellen's press conference last Wednesday, CNBC reporter Steve Liesman, who has perhaps been one of the most reliable supporters of the Fed's policies, seemed to indicate that even he had grown weary of the Fed's prevarications, saying to Chairman Yellen: "Does the Fed have a credibility problem in the sense that it says it will do one thing under certain conditions, but doesn't end up doing it? And...if the current conditions are not sufficient for the Fed to raise rates,...what would those conditions ever look like?"Yellen's response was measured and lengthy, but what it really boiled down to was, "Steve, why have you taken our prior forecasts at face value? We never actually offered firm commitments on anything. Nor did we specifically endorse the things that we seemed to have said. And just so you know, you should expect that the things we are saying now will 'fully evolve' over time as well." Or in plain English: "Steve, don't you know by now that we have no idea what we are talking about, that our forecasts are just guesses, and since we normally guess wrong, why should you expect greater accuracy now? If anything, it should be obvious that our guesses are biased in favor of stronger growth, as the intention is for those rosy forecasts to positively influence sentiment, thereby helping to obscure the problems that, for political reasons, we are hesitant to acknowledge".Talk is cheap, and the Fed buys it by the bushel. But when it comes time to actually do something, it is nowhere in sight. In voicing his frustration, Liesman pointed out that core inflation has gone up the past two months (in fact, it has already breached the Fed's 2% target), that the jobs report was strong (in fact, the economy is creating 200,000 plus jobs per month), and that the GDP tracking forecast has returned to two percent. And while I have explained on many occasions why those data points are all misleading to the upside, Yellen has made no such qualifications. The growing chasm between what the Fed says it is going to do and what it is actually doing is getting increasingly hard for the mainstream to swallow. When it stops going down at all, a market shift of considerable proportions could begin in earnest.One of the data points that Yellen likes to cling to most fiercely are the reports that show consumers are confident that the economy has improved and that it will continue to do so. But those reports, which I have always believed are poorly constructed, are completely at odds with what voters (who are also consumers) are actually saying at the polls. Presidential primary exit polls in state after state indicate that the economy has been the top issue on the minds of voters. Generally speaking, this should indicate that people are not overly optimistic about the economy. If they were, other issues, such as immigration, national security, the environment, and health care, would be cited as their top concern.The big surprise this primary season has been the rise of Donald Trump among Republicans and Bernie Sanders among Democrats. Voters aren't choosing Trump because they like his hair or Sanders because they like his glasses. Both are considered insurgents in their respective parties. They represent change and their popularity should be seen as a sign of deeply-seated economic uncertainty in voters rather than confidence. If confidence were high, candidates more closely aligned with the status quo should be on top.According to both the Fed and its economic lapdogs on Wall Street, one of the few other bright spots in the economy is the fact that inflation is finally starting to ramp up noticeably. Last week it was revealed that the core Consumer Price Index (CPI) had risen 2.3% from the year earlier (Bureau of Labor Statistics), thereby eclipsing the Fed's long-sought 2% target. The economists argue that rising prices will soon lead to rising wages. Yes, consumers are paying more for rent, insurance, food and healthcare, but the long-sought wage increases have yet to materialize. For obvious reasons, consumers tend to avoid celebration if their bills go up and their pay does not.Higher prices may be the leading reason why consumers are not spending at the expected pace. Last month, economists cheered when January retail sales came in at up .2% for the month (up if you excluded autos and gasoline), according to Commerce Department data. In fact, the Atlanta Fed cited these numbers when boosting its annualized 1st quarter GDP forecast to 2.7% (since revised back down to 1.9%) (FRB Atlanta). But, last week we were told that the January retail sales number was revised way down to negative .4% from the positive .2%. Excluding autos and gasoline, the numbers went down from up .4% to down .1% in February. I don't recall ever seeing larger retail sales revisions to the downside. But because the revisions were so large, the February numbers could be viewed as positive even though they were way below the pre-revision January numbers.The slowing sales, in turn, are leading to a dangerous increase in business inventories as unsold goods accumulate on shelves. The inventory-to-sales ratio now stands at 1.4, the highest it has been since May 2009, when the nation was in the midst of the Great Recession. In fact, it has never been this high at times when the economy was not in recession. Similarly, data revisions released last week also indicate that we may ultimately post a full year 2015 current account deficit of $481 billion, the biggest number since the recession year of 2008. If interest rates go up, that deficit could grow significantly worse. The industrial production numbers are also on a downward spiral. Recent data show declines for four straight months, the first time since 1952 that this has occurred without the U.S. being in recession. But if we are already in recession, which I expect we are, then at least that statement will no longer be true.All this adds up to a nearly inescapable trap for the Fed. The economy is weakening while inflation is strengthening. In the meantime, asset prices, which have become the bedrock of any remaining economic confidence, are extremely vulnerable to an interest rate increase.As a result, we should expect continued jawboning and inaction from the Fed. All it can do is pray that the economy heats up so it can finally do what it has long promised. But if we keep scraping along the bottom like we have, or go further into the danger zone, look for the Fed to take away those remaining two promised hikes just as easily as it did the first two. The last thing the Fed can bear is for a recession that may be bubbling just under the surface to boil over into full view in the months heading into the election. If that occurs, we all may be seeing a great many press conferences from Mar-a-Lago. That is a development that I'm sure Janet Yellen wants to avoid at all costs.

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.